Distribution of Revenues
Article
268 Duties levied by the Union but collected and appropriated by the
States
(1) Such stamp duties and such duties of excise
on medicinal and toilet preparations as are mentioned in the Union
List shall be levied by the Government of India but shall be
collected -
(a) in the case where such duties are leviable
within any Union territory, by the Government of India, and
(b)
in other cases, by the States within which such duties are
respectively leviable.
(2) The proceeds in any financial year of
any such duty leviable within any State shall not form part of the
Consolidated Fund of India, but shall be assigned to that State.
Article
269 Taxes levied and collected by the Union but assigned to the
States
(1) The following duties and taxes shall be
levied and collected by the Government of India but shall be assigned
to the States in the manner provided in clause (2), namely: -
(a)
duties in respect of succession to property other than agricultural
land;
(b) estate duty in respect of property other than
agricultural land;
(c) terminal taxes on goods or passengers
carried by railway, sea or air;
(d) taxes on railway fares and
freights;
(e) taxes other than stamp duties on transactions in
stock-exchanges and futures markets;
(f) taxes on the sale or
purchase of newspapers and on advertisements published therein;
(g)
taxes on the sale or purchase of goods other than newspapers, where
such sale or purchase takes place in the course of inter-State trade
or commerce;
(h) taxes on the consignment of goods (whether the
consignment is to the person making it or to any other person), where
such consignment takes place in the course of inter-State trade or
commerce.
(2) The net proceeds in any financial year of any such
duty or tax, except in so far as those proceeds represent proceeds
attributable to Union territories, shall not form part of the
Consolidated Fund of India, but shall be assigned to the States
within which that duty or tax is leviable in that year, and shall be
distributed among those States in accordance with such principles of
distribution as may be formulated by Parliament by law.
(3)
Parliament may by law formulate principles for determining when a
sale or purchase of, or consignment of, goods takes place in the
course of inter-State trade or commerce.
Article
270 Taxes levied and collected by the Union and distributed between
the Union and the States
(1) Taxes on income other
than agricultural income shall be levied and collected by the
Government of India and distributed between the Union and the States
in the manner provided in clause (2).
(2) Such percentage, as
may be prescribed, of the net proceeds in any financial year of any
such tax, except in so far as those proceeds represent proceeds
attributable to Union territories or to taxes payable in respect of
Union emoluments, shall not form part of the Consolidated Fund of
India, but shall be assigned to the States within which that tax is
leviable in that year, and shall be distributed among those States in
such manner and from such time as may be prescribed.
(3) For the
purposes of clause (2), in each financial year such percentage as may
be prescribed of so much of the net proceeds of taxes on income as
does not represent the net proceeds of taxes payable in respect of
Union emoluments shall be deemed to represent proceeds attributable
to Union territories.
(4) In this article -
(a) "taxes
on income" does not include a corporation tax:
(b)
"prescribed" means -
(i) until a Finance Commission
has been constituted, prescribed by the President by order, and
(ii)
after a Finance Commission has been constituted, prescribed by the
President by order after considering the recommendations of the
Finance Commission;
(c) "Union emoluments" includes
all emoluments and pensions payable out of the Consolidated Fund of
India in respect of which income-tax is chargeable.
Article
271 Surcharge on certain duties and taxes for purposes of the
Union
Notwithstanding anything in articles 269 and 270,
Parliament may at any time increase any of the duties or taxes
referred to in those articles by a surcharge for purposes of the
Union and
the whole proceeds of any such surcharge shall form
part of the Consolidated Fund of India.
Article
272 Taxes which are levied and collected by the Union and may be
distributed between the Union and the States
Union duties of
excise other than such duties of excise on medicinal and toilet
preparations as are mentioned in the Union List shall be levied and
collected by the Government of India, but, if Parliament by law so
provides, there shall be paid out of the Consolidated Fund of India
to the States to which the law imposing the duty extends sums
equivalent to the whole or any part of the net proceeds of that duty,
and those sums shall be distributed among those States in accordance
with such principles of distribution as may be formulated by such
law.
Article
273 Grants in lieu of export duty on jute and jute products
(1)
There shall be charged on the Consolidated Fund of India in each year
as grants-in-aid of the revenues of the States of Assam, Bihar,
Orissa and West Bengal, in lieu of assignment of any share of the net
proceeds in each year of export duty on jute and jute products to
those States, such sums as may be prescribed.
(2) The sums so
prescribed shall continue to be charged on the Consolidated Fund of
India so long as any export duty on jute or jute products continues
to be levied by the Government of India or until the expiration of
ten years from the commencement of this Constitution, whichever is
earlier.
(3) In this article, the expression "prescribed"
has the same meaning as in article 270.
Article
274 Prior recommendation of President require to Bills affecting
taxation in which States are interested
(1) No Bill or
amendment which imposes or varies any tax or duty in which States are
interested, or which varies the meaning of the expression
"agricultural income" as defined for the purposes of the
enactments relating to Indian income-tax, or which affects the
principles on which under any of the foregoing provisions of this
Chapter moneys are or may be distributable to States, or which
imposes any such surcharge for the purposes of the Union as is
mentioned in the foregoing provisions of this Chapter, shall be
introduced or moved in either House of Parliament except on the
recommendation of the President.
(2) In this article, the
expression "tax or duty in which States are interested"
means -
(a) a tax or duty the whole or part of the net proceeds
whereof are assigned to any State; or
(b) a tax or duty by
reference to the net proceeds whereof sums are for the time being
payable out of the Consolidated Fund of India to any State.
Article
275 Grants from the Union to certain States
(1) Such
sums as Parliament may by law provide shall be charged on the
Consolidated Fund of India in each year as grants-in-aid of the
revenues of such States as Parliament may determined to be in need of
assistance, and different sums may be fixed for different
States:
Provided that there shall be paid out of the
Consolidated Fund of India as grants-in-aid of the revenues of a
State such capital and recurring sums as may be necessary to enable
that State to meet the costs of such schemes of development as may be
undertaken by the State with the approval of the Government of India
for the purpose of promoting the welfare of the Scheduled Tribes in
that State or raising the level of administration of the Scheduled
Areas therein to that of the administration of the rest of the areas
of that State:
Provided further that there shall be paid out of
the Consolidated Fund of India as grants-in-aid of the revenues of
the State of Assam sums, capital and recurring, equivalent to -
(a)
the average excess of expenditure over the revenues during
the
two years immediately preceding the commencement of this Constitution
in respect of the administration of the tribal areas specified in
Part I of the table appended to paragraph 20 of the Sixth Schedule;
and
(b) the costs of such schemes of development as may be
undertaken by that State with the approval of the Government of India
for the purpose of raising the level of administration of the said
areas to that of the administration of the rest of the areas of that
State.
(1A) On and from the formation of the autonomous State
under article 244A, -
(i) any sums payable under clause (a) of
the second proviso to clause (1) shall, if the autonomous State
comprises all the tribal areas referred to therein, be paid to the
autonomous State, and, if the autonomous State comprises only some of
those tribal areas, be apportioned between the State of Assam and the
autonomous State as the President may, by order, specify;
(ii)
there shall be paid out of the Consolidated Fund of India as
grants-in-aid of the revenues of the autonomous State sums, capital
and recurring, equivalent to the costs of such schemes of development
as may be undertaken by the autonomous State with the approval of the
Government of India for the purpose of raising the level of
Administration of that State to that of the administration of the
rest of the State of Assam.
(2) Until provision is made by
Parliament under clause (1), the powers conferred on Parliament under
that clause shall be exercisable by the President by order and any
order made by the President under this clause shall have effect
subject to any provision so made by Parliament:
Provided that
after a Finance Commission has been constituted no order shall be
made under this clause by the President except after considering the
recommendations of the Finance Commission.
Article
276 Taxes on professions, trades, callings and employments
(1)
Notwithstanding anything in article 246, no law of the Legislature of
a State relating to taxes for the benefit of the State or of a
municipality, district board, local board or other local authority
therein in respect of professions, trades, callings or employments
shall be invalid on the ground that it relates to a tax on
income.
(2) The total amount payable in respect of any one
person to the State or to any one municipality, district board, local
board or other local authority in the State by way of taxes on
professions, trades, callings and employments shall not exceed two
thousand and five hundred rupees per annum.
(3) The power of the
Legislature of a State to make laws as aforesaid with respect to
taxes on professions, trades, callings and employments shall not be
construed as limiting in any way the power of Parliament to make laws
with respect to taxes on income accruing from or arising out of
professions, trades, callings and employments.
Article
277 Savings
Any taxes, duties, cesses or fees which,
immediately before the commencement of this Constitution, were being
lawfully levied by the Government of any State or by any municipality
or other local authority or body for the purposes of the State,
municipality, district or other local area may, notwithstanding that
those taxes, duties, cesses or fees are mentioned in the Union List,
continue to be levied and to be applied to the same purposes until
provision to the contrary is made by Parliament by law.
Article
278 Agreement with States in Part B of the First Schedule with regard
to certain financial matters
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Article
279 Calculation of "net proceeds", etc.
(1)
In the foregoing provisions of this Chapter, "net proceeds"
means in relation to any tax or duty the proceeds thereof reduced by
the cost of collection, and for the purposes of those provisions the
net proceeds of any tax or duty, or of any part of any tax or duty,
in or attributable to any area shall be ascertained and certified by
the Comptroller and Auditor-General of India, whose certificate shall
be final.
(2) Subject as aforesaid, and to any other express
provision of this Chapter, a law made by Parliament or an order of
the President may, in any case where under this Part the proceeds of
any duty or tax are, or may be, assigned to any State, provide for
the manner in which the proceeds are to be calculated, for the time
from or at which and the manner in which any payments are to be made,
for the making of adjustments between one financial year and another,
and for any other incidental or ancillary matters.
Article
280 Finance Commission
(1) The President shall, within
two years from the commencement of this Constitution and thereafter
at the expiration of every fifth year or at such earlier time as the
President considers necessary, by order constitute a Finance
Commission which shall consist of a Chairman and four other members
to be appointed by the President.
(2) Parliament may by law
determine the qualifications which shall be requisite for appointment
as members of the Commission and the manner in which they shall be
selected.
(3) It shall be the duty of the Commission to make
recommendations to the President as to - (a) the distribution between
the Union and the States of the net proceeds of taxes which are to
be, or may be, divided between them under this Chapter and the
allocation between the States of the respective shares of such
proceeds;
(b) the principles which should govern the
grants-in-aid of the revenues of the States out of the Consolidated
Fund of India;
(bb) the measures needed to augment the
Consolidated Fund of a State to supplement the resources of the
Panchayats in the State on the basis of the recommendations made by
the Finance Commission of the State;
(c) the measures needed to
augment the Consolidated Fund of a State to supplement the resources
of the Municipalities in the State on the basis of the
recommendations made by the Finance Commission of the State;
(d)
any other matter referred to the Commission by the President in the
interests of sound finance.
(4) The Commission shall determine
their procedure and shall have such powers in the performance of
their functions as Parliament may by law confer on them.
Article
281 Recommendations of the Finance Commission
The President
shall cause every recommendation made by the Finance Commission under
the provisions of this Constitution together with an explanatory
memorandum as to the action taken thereon to be laid before each
House of Parliament.
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